Next year Labour's 'make or break'

The next year will be "make or break time" for New Labour, one of Tony Blair's closest allies said.

Stephen Byers, a former Cabinet minister, called for an open debate about the future of the party but appealed to the Prime Minister's critics not to "turn the clock back".

His intervention comes as Mr Blair gears up for Labour's annual conference in Manchester next month amid increasing disquiet about his leadership.

The Lord Chancellor, Lord Falconer, earlier brushed aside calls for him to quit, insisting the premier still had "lots to do" on education, health and security.

Writing in The Times, Mr Byers acknowledged that there was "disappointment, and at times disillusionment", but said that was "part and parcel of being in government for a number of years".

The former transport secretary went on: "The challenge for us in the Labour Party is to identify how we can turn this round and bring together once again the broad coalition of electoral support that won three elections.

"This will be make or break time for New Labour. The year ahead will set out Labour's priorities for the next decade and, in so doing, the post-Blair agenda."

He said next year's Comprehensive Spending Review would be a major opportunity to set out the Government's direction after Mr Blair.

His foray into a Treasury area is likely to be seen as an appeal to allies of Chancellor Gordon Brown, who is widely regarded as Mr Blair's most likely successor. It follows a similar article in The Sunday Telegraph last week when Mr Byers called for inheritance tax to be abolished.